When the going is good, the government got going with the cabinet tonight deciding to hit the market with a mega issue of 10 per cent each of the equity in Oil and Natural Gas Corporation (ONGC) and Gas Authority of India Ltd (Gail).

Ten per cent in each of the companies put together is valued at Rs 11,500 crore at current market prices. The divestment will take place before this financial year is out.

After a meeting of the cabinet committee on disinvestment, Arun Shourie, the disinvestment minister, said the equity would be sold through a public offer.

He has won elections in three states, foreign exchange reserves topped $100 billion the other day and, most of all, the stock market is galloping.

This Christmas, which happens to be his birthday too, the government has decided to spread the cheer.

“The market is buoyant and the Prime Minister and the finance minister wanted retail investors to share the buoyancy in the market,” Shourie said.

He did not say that the sale would also see the finance minister through to the divestment target for 2003-04 of Rs 13,200 crore. Till November 20, only about Rs 1,335 crore had been collected.

The proposal to divest from ONGC and Gail was floated after the Supreme Court stopped privatisation of Hindustan Petroleum and Bharat Petroleum because of a legal technicality.

Overcoming the hitch will entail amendments that have to be passed in Parliament, a painstaking process. ONGC and Gail have, obviously, been felt to be better options.

Shourie said a 10 per cent holding in ONGC is valued at current prices at Rs 10,000 crore (ruling around Rs 750 a share) and in Gail at Rs 1,500 crore (quoting around Rs 210 a share).

How much of the issue is to be set aside for retail investors, who appear to be returning to the stock market, will be decided by an inter-ministerial committee of finance, law, petroleum and disinvestment.

A total of 14.2 crore shares of ONGC and 8.4 crore shares of Gail will be available for sale.

Oil companies are a goldmine for the government. Even after the dilution, its stake in ONGC will be 74.11 per cent and in Gail 57.34 per cent.